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How the 2014 Ram 1500 Stepped Up Big to Beat Chevy's Silverado

Chrysler is countering strong-selling V6 pickups from Ford with a new diesel version of the Ram 1500. Ram pickups outsold the Chevy Silverado last month for the first time in almost 15 years. Photo credit: Chrysler

Good news for Fiat Chrysler (NASDAQOTH: FIATY  ) in the all-important pickup wars: Its Ram full-sized pickup line outsold the Chevy Silverado in March.

Sales of the Ram rose 26% to the Silverado's 6.8% gain -- enough for the Ram to out-sell Chevy's trucks by 285 units.

It's a small victory for Chrysler, but it's an important one: It's the first time that its pickups have outsold Chevy in almost 15 years.

Better yet for Chrysler: With Ford's (NYSE: F  ) market-leading F-Series up just 5%, the Ram gained market share at Ford's expense, too.

How to gain share in the pickup market
Chrysler's not-so-secret strategy to gain a bigger share of the pickup market has two key parts:

Part one: Offer a good truck. The latest Ram has received lots of critical praise for its capabilities -- and its surprisingly comfortable ride. Like other Chrysler products, its interior and overall fit and finish are miles ahead of what the smallest of the Once-Big Three was offering just a few years ago. In particular, the Ram test-drives very well, which has probably gained Chrysler quite a few sales.

Part two: Offer a great deal. General Motors  (NYSE: GM  ) spokesman Jim Cain snarked Chrysler's approach to boosting sales this past week. As Cain told Automotive News, "It's really easy to deeply discount your truck, mine the subprime market and offer cheap lease deals to buy market share." It's uncharitable, but it's a fair description of Chrysler's approach. 

And it may or may not be easy, as GM's Cain said, but it works.

Chrysler has long had a reputation for being more friendly to subprime buyers than the other guys, more willing to work with financing companies to make a deal for a customer who was ready to sign. 

And Chrysler's average incentives on the Ram were a lot  higher than GM's last month: Even with GM running a big national truck promotion, Chrysler's average of $5,598 per truck was a whopping 46% higher than GM's average payout on the Silverado, according to J.D. Power figures reported by Bloomberg

It was also considerably higher than Ford's incentives, which have averaged about $4,000 per truck for several months now. 

Even with those payouts, Ford's average transaction prices have remained quite high -- and if Ford's recent North American profits are any indication, it's making very good money on the F-150 right now.

It's unclear whether Fiat Chrysler can say the same about its profits on the Ram.

Profits are key to GM's strategy
GM has stuck with relatively stingy incentives on the new Silverado because it has made boosting profits a high priority.

That strategy has been working: GM is selling more higher-priced trucks than it did before. Its average transaction prices have risen significantly over the last year, and have been very close to Ford's in recent months.

But even with all GM has been dealing with lately, it had to sting to fall behind Chrysler last month. 

GM stepped it up a bit this past week, boosting incentives on certain versions of the Silverado and extending its "Chevy Truck Month" promotion into April. 

That should keep Chevy dealers happy. We'll know in a few weeks whether GM and Fiat Chrysler shareholders will be happy with the profits from this latest price war.

What do you think? Is Chrysler sacrificing profits for market share? Or is it just taking advantage of a difficult time for GM? Scroll down to leave a comment and let me know.

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 06, 2014, at 2:55 PM, A9930thTA wrote:

    Ram trucks are for the Citidiot that dosn't need a truck to do what a truck is built to do. The ram has the lowest payload of the big 3 and the lowest towing of the big 3. It has the softest ride because it uses coil springs for the rear which gives it the low payload ratings.

    You have to step up to the Ram Ecodiesel to get close to the towing numbers of the gas Silverado. But to be blunt their trucks are just flat out junk. They do not hold up to the GM or Ford trucks in longevity.

    Sure there will be people who make a comment about the Ram HD commercial and how they claim to have a truck that can tow 30,000 lbs but its a gimmick comment, That claim is ONLY for the regular cab 3500 dually with the vinyl interior and 4.11 rear axle. When you look at the towing and payload numbers of their double and crew cab HD models they fall well short of the GM twins and the F series trucks. And most HD trucks are not reg cab vinyl sales. They are double and crew cab with cloth or leather and Crapsler falls very short in their offerings.

    They may be stealing sales with massive rebates and incentives to get people into their showrooms now, but after leasing a Crapsler vehicle 1 time those customers will not return because they make junk. In 3 years GM and Ford will benefit from their current tactics to gain market share. Especially when Fiat doesn't have any profits to upgrade their products or make them better.

  • Report this Comment On April 07, 2014, at 12:47 PM, LouisTewl wrote:

    >"John Roseveer owns shares of Ford and General Motors. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford.<"

    Enough Said.

    On the other hand, FCA is up almost 2% and pushing up against their recently achieved annual high of $12.18 @ $12.05 on over 1.5M shares in a very bearish environment. Ford and GM? Not so much.

    Enough Said.

  • Report this Comment On April 07, 2014, at 1:45 PM, LouisTewl wrote:

    Although certainly Bloomberg can't match the professionalism and neutrality of TMF and JR, their article of March 31 says this:

    >"Analysts and critics have praised the Ram for its big rig styling, power and fuel efficiency. Consumer Reports magazine last month named the Ram 1500 the best overall pickup in its Top Picks list of cars and trucks. It was the first time in 16 years any Chrysler model made the Top Picks list of the Yonkers, New York-based magazine.<"

    And this:

    >“You can’t just explain the Ram’s growth with incentives,” said Jeff Schuster, an analyst with researcher LMC Automotive in Troy, Michigan. “Clearly, pricing plays a role, but the Ram does offer some features and content that buyers are interested in. And the styling separates it from the other two.” <

    As for A9930th's comments, all I can say is - You must be related to JR, and honestly, while I don't drive a truck, here is a comment that follows a story about the 2015 Ford F-150:

    >"To say Dodge truck's don't work is stupid at best.

    Both the Ram 2500,3500, are class leading for tow haul. 1500 is not a work truck. Why should people sacrifice ride quality in a pick up for capability? Toyota only offers a 1500 so their eggs only go in one basket. That's what makes a 1500 a 1500. Smoother ride than a 2500. Rams 1500 has a class leading ride.

    Did you see it spank Ford,Chevy, Toyota in the tow test uphill. It is built for a 1500 market. Not a Ford 150 trying to be a 250.

    I know the contractors like the F150 for capability for less money than a 250."<

    That story, BTW, is here:

    Fool On.

  • Report this Comment On April 07, 2014, at 2:00 PM, LouisTewl wrote:

    Finally, @ A9930th, re the coil springs, low payload, sag, etc., a commenter in the above story about Ford said this:

    >"I've worked a Ram 1500, 2010 quadcab 4x4 Hemi, to be exact... Speaking of the cheap airbags, I put some Air Lift ones on the above truck. $85 worth, and I can hold anything those Supercab 4x4s without the max payload can hold...Just because a lot of people are too cheap to get a weight distributing hitch and run around ass end low, which I see happen with Chevys and Fords too, or because you want to constantly work a half ton like an F-250 (because F-250 cost so much and their gassers suck fuel) doesn't mean we all need leaf springs."<

    And on.

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John Rosevear

John Rosevear is the Fool's Senior Auto Specialist. John has been writing about the auto business and investing for over 20 years, and for The Motley Fool since 2007.

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